A China skeptic takes a victory lap
What happens when you think differently about something important? Something that can move markets, influence investor decisions, or help sway policy?
If you said “you make money,” that’s only partially right. You may have identified the next big thing, but unless other investors agree with you, its stock won’t move. Ask any of the protagonists of Michael Lewis’ The Big Short what it’s like to wait for everyone else to catch up to you.
Thinking different – and going unheard – was the situation Leland Miller found himself in this past winter. Miller is one of the founders of the China Beige Book, a unique economic research firm that uses survey data from industry sources inside the country to compile a more granular profile of economic conditions than the notoriously opaque Chinese government provides.
Miller’s pitch is that the details matter. Even if investors could believe the big narrative yarns that the Chinese government spins – and they can’t – those broad-brush ideas can’t guide investment theses or policy decisions.
But this winter tested his faith. It was just a few weeks after China’s national party congress, and western investors were content that the country’s leaders had everything firmly in hand as they deftly steered the country from a manufacturing-intensive old economy to a 21st-century service-based one, all the while keeping a careful watch on overall growth so that it would downshift gradually, not in fits and starts.
“People are binary on China – either it’s the greatest country in the world, defies economic gravity, or it’s about to implode,” Miller said. “Now they’re back on the first one.”